The packaged-food giant, known for brands like Slim Jim and Healthy Choice, forecast a drop in organic sales
The packaged-food giant Conagra is contending with inflation-fatigued shoppers, growing GLP-1 use and competition from smaller brands.
Conagra Brands' stock was up a bit on Thursday, but the company's results and forecast were the latest dose of bad news for the packaged-food industry.
Conagra - known for brands like Slim Jim jerky, Healthy Choice frozen meals, Hunt's tomato sauce and Orville Redenbacher's popcorn - cut its dividend in half to shore up its finances, booked a $2 billion impairment charge from a months-long drop in its stock price, reported mixed fourth-quarter results and forecast falling sales in the fiscal year ahead.
Conagra's $(CAG)$ management also said it could raise prices as it tries to manage elevated costs, boost margins and reinvest in the business.
The moves came as Conagra and other packaged-food giants - including PepsiCo and General Mills - contend with inflation-fatigued shoppers, growing use of GLP-1 weight-loss drugs and competition from smaller brands as well as from retailers' cheaper private-label products. Those consumer-goods giants have leaned on newer products, and in particular on trends like protein and other "functional" foods and drinks, to hold consumers' interest.
However, costs to make protein-boosted products have risen. And consumer-goods companies are facing higher shipping costs due to the Iran war, as well as higher costs for things like beef.
John Brase, who took over as Conagra CEO in June, said on Wednesday that the company planned to increase spending on developing its brands and improving its supply chain, while taking steps to lift margins in its frozen-foods segment and elsewhere. He said Conagra had what was "probably our strongest innovation pipeline" in place to engage consumers.
But to accomplish some of those goals, the company might need to make some adjustments to its prices.
"We're going to also have to lean on inflation-justified pricing where necessary, just to give us the fuel that we need to invest in our business and with our customers to drive that long-term growth," he said.
Shares of Conagra were up 0.1% on Wednesday. However, the stock is down 17.9% so far this year. Shares are trading at around $14, well off their highs of more than $40 reached in 2017. The stock has largely fallen since 2023.
In recent years, Conagra has spent more money on improving volumes - or the amount of product sold - but that has hurt margins in the process. Heading into the results, analysts were focused on what kind of outlook Brase might offer as he settled into the CEO job, and what might become of the company's dividend, which the company on Wednesday cut to an annualized rate of 70 cents a share, from $1.40.
Expectations for Conagra were low heading into the results. Afterward, analysts offered up little in the way of enthusiasm.
"While we view the company as setting the correct priorities and taking prudent actions, we see little in today's release that suggests near-term fundamentals are improving," BNP Paribas analyst Max Gumport said.
Some of Conagra's rivals have also struggled this year to please investors. Shares of General Mills $(GIS)$ are down more than 20% so far this year. Over that period, PepsiCo's stock $(PEP)$ is down around 5%, while Campbell's $(CPB)$ has lost 21.6%. However, Kraft Heinz's stock $(KHC)$ is up 4.2% over that time, and shares of Oreo maker Mondelez International $(MDLZ)$ have risen 8.8%.
Conagra said it expects organic sales - or sales that exclude the impact of things like foreign exchange, acquisitions and divestments - to fall between 1% and 3% for its current fiscal year, which runs through May.
For its fiscal fourth quarter, on a GAAP basis, Conagra lost $3.37 a share, "primarily as a result of certain non-cash goodwill and brand impairment charges." The company said that during the quarter, it recorded $2 billion in noncash goodwill and brand impairment charges "primarily triggered by a sustained decline in the company's share price and market capitalization."
Conagra reported adjusted earnings per share of 47 cents, down from 56 cents a year ago but a penny above Wall Street's estimates. Revenue increased 3.6% year over year to $2.882 billion. That figure barely missed analyst expectations for $2.889 billion.
-Bill Peters
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 15, 2026 14:07 ET (18:07 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments